Desperate to Keep 'Hobbit,' New Zealand Officials to Meet with Warner Bros. Execs

Media conglom may push for more financial incentives; continued uncertainty drives down value of the N.Z. dollar; rallies planned in six cities.

With the labor dispute surrounding The Hobbit winding down, the focus now shifts to meetings this week between Warner Bros. executives and top ministers in the New Zealand government.

The stated purpose of the meetings is to decide whether the studio will keep the Peter Jackson-directed production in-country or move it to the U.K. or elsewhere. A spokesperson for New Line, the film's producer, said no decision had been made.

However, the question on the minds of observers is whether the studio will also seek and extract from the government higher production incentives than the existing 15% Large Budget Screen Production Grant.

If so, the result would be a dramatic demonstration of the power a media conglomerate can assert over a small nation desperate to retain a $500 million production. One measure of the gravity of the situation is the contention by currency analysts that the continuing uncertainty had helped drive down the value of the New Zealand dollar.

In a separate development, The Hollywood Reporter has learned that the film's production entity has been sending contracts to Kiwi actors that provide for residuals, a first for local performers.

However, according to a source, those contracts also fall below local custom and practice in certain areas related to working conditions. Another observer said this was not the case.

Late Sunday afternoon (Monday in New Zealand), rallies were scheduled in a half-dozen locations up and down the country, including the nation's three largest cities and several other areas related to production of Hobbit or The Lord of the Rings. The purpose of the rallies is to demonstrate local enthusiasm to the Warners executives.

The labor dispute ended several days ago with an agreement by the local performers union, New Zealand Actors Equity, to take no action against the production and lift the "do not work" order against the film. SAG, AFTRA and Canada's ACTRA also lifted their bans, at the apparent request of NZAE.

The bans might have had a positive effect for local performers in that the actors contracts being sent out provide for residuals for New Zealand and other non-SAG actors. One source claimed that this was not the case before to the union bans, and another said that the "participation pool" from which residuals would be paid had been offered by the studio before the dispute.

The residuals, equal to 2% of distributor gross, do not kick in until two years after the film's release. In contrast, most SAG theatrical residuals are 3.6% and begin immediately upon release in media other than theatrical. Still, Simon Whipp, of NZAE's parent organization, said the 2% formula was "generous" in the context of the previous absence of residuals in New Zealand.